Industry Trends Report - Q4 2012 - Preview Deck

The quarterly Industry Trends reports are focused on providing industry-specific data, developments, and insights. Industry Trends provide the research and analysis that enable users to navigate through complexity and make clear, effective decisions contextualized and suited to their specific industry. These reports provide detailed information on transaction activities, Global In-house Center (GIC) developments, service providers' market shares, and key outsourcing transactions specific to particular industries.Industry Trends series currently covers 8 industries (Banking, Financial Services, & Insurance; Manufacturing, Distribution, & Retail; Energy & Utilities; Healthcare; Technology; Telecom; Public Sector; and Travel and Hospitality) which account for majority of the outsourcing and offshoring activity.
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Market Vista: Q4 2012 – Preview Deck Market Vista Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Our research offerings for global services Subscription information  The full report is included in the following subscription(s) – Market Vista In addition to published research, a subscription may include analyst inquiry, data cuts, and other services If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: – [email protected] – +1-214-451-3110 Market Vista Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available Banking, financial services, insurance Procurement Healthcare Information technology Recruitment process Service provider Intelligence Finance & accounting  Cloud Vista  Human resources Global sourcing Transaction Intelligence PricePoint Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 2 Table of contents   Product overview Illustrative contents Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 3 The increasing complexity of the outsourcing market has amplified the risk exposure for companies Factors driving increased risk Vendor and model proliferation Multiple service providers and business models Examples of risks Regulatory risk Ensuring compliance with regulatory guidelines in source and destination countries across service providers Business case risk Managing wage inflation without affecting quality of service Performance risk Managing quality of service delivery, attrition, knowledge retention Data security and intellectual property risk Implementing measures to safeguard data and intellectual property Large span of functions Typically combination of many IT, BPO and some KPO services Increasing scope Significant proportion of operations now in low cost locations Global delivery chain Services often delivered from multiple locations with diverse risk footprint Dynamic economies Most delivery locations are emerging economies going through rapid change Concentration risk Business continuity risk Currency risk …. Most large companies have capabilities in global risk management. However, the level and type of risk exposure that is emerging from the globalization of services is unprecedented Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 4 Sourcing leaders are being asked to manage risks associated with global sourcing and support the delivery of transformational results What are my peers doing? Are there opportunities to optimize my pricing? What is the real inflation and how does it compare to price increases in my portfolio? What new service delivery models/ service providers are my peers leveraging? How can I better manage forex changes? Are there new govt. incentives that I can avail? What new risks are my service providers taking on? Who are the emerging service providers in my areas? How are the relative costs moving across locations? Are their any new political or macroeconomic risks I need to be aware of NOW ? Key decisions that Sourcing managers need to support  Comparison with peers  Location risk management  service provider selection and optimization  Design of new deals  Price benchmarking and contract renewals Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 5 Market Vista provides continuously updated facts and analysis every quarter to enable effective management of global services portfolios Each quarterly Market Vista report captures developments across three key areas 1 Market overview  2 Location trends and risks  3 Service provider developments   Outsourcing transactions trends – Transaction analysis – By function, geography, deal size and duration, etc. – Transaction analysis by industry verticals (more details in Industry Trends reports) – Listing of major IT/BPO outsourcing deals – Large offshore deals Analysis of GICs – New GIC set-ups, divestures – Plans for GIC set-ups and expansion   Key location developments – Establishment of new offshore centers, expansion of existing centers, plans of establishment and expansion of centers Risk dashboard capturing key current and emerging risks – Geo-political / economic changes – Government initiatives Quarterly focus – Fact-base on Asian locations – Sustainability of arbitrage – Operating costs, inflation rates, and currency trends across key cities Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Key developments among 20 leading global service providers – Financial performance – Transaction activity – Changes in delivery footprint – M&A and alliance activity  Detailed profiles for each player capturing key developments across dimensions 6 Additional Market Vista deliverables Global Location Insights newsletter Breaking Viewpoints on key developments Market Vista Primers 4-6 published every year   8-10 published every year   4-5 published every year   E-newsletter published every two months Recent topics included – Healthcare BPO in Philippines – Service providers’ locationrelated plans – China’s offshore maturity – Buyer’s offshoring plans Event/theme based e-briefings Recent topics included – The Risky Side of Offshore Growth: Operational Challenges in the Top five Indian IT Majors – Perspective on M&A events (Atos-Siemens IT, iGate-Patni, Wipro-SAIC’s Oil & Gas IT Business) Published every quarter Recent topics included – Global sourcing trends in U.S. Mortgage industry – Contact center service providers in Latin America – French language service providers in EMEA Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 7 Table of contents   Product overview Illustrative contents Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 8 Each section of the quarterly report comprises 30+ pages of insight and data Illustrative Table of Contents (page 1 of 2) Topic Section I A: Trend analysis – Outsourcing, offshoring, and GICs Outsourcing transactions analysis  Outsourcing transaction trends by time period  Offshore transactions analysis  GIC developments  Section I B: Data snapshots  Major deals signed in the quarter  List of mega deals signed in the quarter  Examples of very large deals signed in the quarter  Examples of large deals signed in the quarter  Analysis of outsourcing transactions by buyer revenue  List of new GIC announcements in the quarter  List of GICs with announcements for expansion in the quarter  List of GIC divestures in the quarter Section II A: Trend analysis – Risk and opportunity dashboard and analysis  Risk and opportunity dashboard  Risk and opportunity analysis Section II B: Focus geography  Arbitrage sustainability  Operating costs  Operating cost inflation  Currency trends Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 9 Each section of the quarterly report comprises 30+ pages of insight and data Illustrative Table of Contents (page 2 of 2) Topic Section II C: Data snapshots Market activity: Delivery centers established in the quarter  Market activity: Delivery centers planned in the quarter  Market activity: Expansion announcements in the quarter  Regional developments: Geopolitical, macroeconomic environment  Regional developments: Leading economic indicators  Regional developments: Investment environment  Section III A: Trend analysis – Key developments across service providers  Service provider developments overview  Analysis of service provider developments Section III B: Data snapshots – Details of key developments and profiles by service providers  Recent M&A activity by service providers  Recent alliances and partnerships forged by service providers  Locations  Key market developments Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 10 Section I – Market section | Overview Captures outsourcing transactions trends, GIC developments with an emphasis on large size contracts Market overview | Outsourcing/offshoring market index Index of outsourcing transactions1 Number XX XX XX XX XX XX XX XX XX XX QX Year Y-1 XX XX XX QX-1 Year Y QX Year Y Latin America: XX captive setups  XXXX opened a new shared services center in XXXX Middle East and Africa: XX captive set-ups  XXXX opened its first regional support center in XXXX  XX opened its new customer service center in XXXX GIC set-ups | By region Europe: XX captive set-ups  XXXX opened its shared business service center in XXXX  XXXX opened its new BPO center in XXXX Rest of Asia: XX captive set-ups  XXXX opened its new R&D facility in XXXX  XXXX opened an R&D facility in XXXX  XXXX opened its new center in XXXX Index of offshore captive health1 Number 2 Captive set-ups = Captive divestures = New + Expansion QX Year Y-1   QX-1 Year Y QX Year Y Transaction volumes decreased by XX% compared to the previous quarter but increased by XX% compared to the previous year Captive activity remained similar compared to previous quarters, with XX new announcements India: XXXX captive set-ups  XXXX opened an R&D center in XXXX  XXXX opened a new R&D center in XXXX  XXXX opened a new R&D center in XXXX Major deals in the quarter Distribution by deal size Number of transactions Distribution by industry verticals Number of transactions Distribution by source geography Number of transactions List of mega deals signed in the quarter Three-quarter moving average2 Mega deals (TCV >= US$1 billion) 100% = XX XXXX XX% XXXX XX% XXXX 100% = XX XXXX XX% XX% XX% XXXX XXXX XX% XXXX 100% = XX Number XX XX XX XX XX QX Year Y XX% XX% XXXX QX Year Y-1 QX+1 Year Y-1 QX+2 Year Y-1 QX+3 Year Y-1 List of mega deals signed XXXX XX% XXXX XX% XX% XXXX XX% XXXX XX% XXXX   There were XX major deals (total contract value exceeding US$XX million) reported in QX 20XX, compared to XX in QX 20XX XX mega deals (total contract value exceeding US$XX billion) were reported in QX, compared to XX in the previous quarter  Apart f rom the XXXX sector, the XXXX and XXXX industry verticals accounted f or around XX% of all major deals XXXX, XXXX, and XXXX industry verticals reported mega deals XXXX and XXXX accounted f or ~XX% of the major deals signed in the quarter XXXX and XXXX also reported some major deals in this quarter Buyer Buyer 1 Buyer 2 Buyer 3 Industry vertical XXXX XXXX XXXX Service provider XXXX XXXX XXXX Deal value (US$ million) XXXX XXXX XXXX Contrac t Functiona duration l scope Services XXXX ITO IT ADM XXXX XXXX ITO    The following pages provide details for mega deals (TCV>US$1 billion), very large deals (TCV - US$200-999 million), and large deals (TCV US$50-199 million) Includes over 15 pages and IT ADM; IT infrastructure – datacenter, helpdesk of data tables across BPO and BPO – HRO, procurement, real estate, and ITO transactions, GICsIT infrastructure – industry-specific; IT ADM; and network, and financial helpdesk services Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 11 Outsourcing transactions analysis | By deal type Profiles the share of renewed/restructured deals compared to the previous quarter and the same quarter of the previous year Number of transactions by type Number of transactions 100% = Renewals/ restructuring1 XX XX% XX XX% XX XX% Major outsourcing transactions reaching the end of their contract duration over the next few months Buyer Buyer 1 Buyer 2 Buyer 3 Buyer 4 Buyer 5 New transaction signings XX% Service provider XXXX XXXX XXXX XXXX XXXX Function scope XXXX XXXX XXXX XXXX XXXX XX% XX% QX Year Y-1 QX-1 Year Y QX Year Y 1 Source: Instances where the scope of existing contract was extended or expanded Everest Group Transaction Intelligence Database Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 12 Section II – Locations section | Overview Key developments and emerging risks and opportunities across locations Locations | Market activity heatmap XXXX XXXX XXXX XXXX XXXX Locations | Risk and opportunity dashboard XXXX XXXX XXXX D B XXXX Czech Republic Hungary Morocco Mexico El Salvador Costa Rica Poland Romania Bulgaria China India Philippines Malaysia Singapore C C XXXX Egypt Panama Brazil A XXXX B B XXXX Chile Argentina South Africa Locations | Focus geography Operating cost per FTE for IT services US$’000s/per annum XX XX XX XX XX XX XX Locations | Market activity data Asia Service provider/ captive XXXX XXXX XXXX XXXX XXXX XXXX XXXX Country City China XXXX XXXX XXXX XXXX XXXX XXXX XXXX City 4 City 5 City 6 City 7 Month XXXX XXXX XXXX XXXX XXXX XXXX XXXX Number of FTEs XXXX XXXX XXXX XXXX XXXX Other comments XXXX XXXX XXXX XXXX XXXX City 1 City 2 City 3 China China India Operating cost per FTE for BPO services US$’000s/per annum XX XX XX XX XX XX XX India India India City 1 City 2 City 3 City 4 City 5 City 6 City 7 Includes over 20 pages XXXX of data tables on market XXXX XXXX XXXX activity, costs, wage inflation, etc. Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 13 Locations | Market activity index Analyzes trends in activity across regions; also compares activity in tier-1 cities and tier-2/3 cities Market activity across geographies Number of service delivery centers set up Market activity across Tier-1 and Tier-2/3 locations Number of service delivery centers set up QX-1 Year Y QX Year Y Year Y-1 Quarterly average XX XX XX XX XX XX XX XX XX Region 1    XX XX XX XX XX XX Region 2 Region 3 Tier-1 Tier-2/3 XX delivery centers were set up during the quarter, XXXX than previous quarter Although location activity increased significantly in XXXX and XXXX, the number of delivery centers established in XXXX decreased to a XX-month low Though players set up centers in both tier-1 and tier-2/3 locations, there was XXXX activity in tier-XX locations Everest Group analysis Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 14 Source: Section II – Locations section | Illustrative output Each quarterly report will cover a deep-dive on a specific geography/ theme Locations | Focus geography Projected sustainability of labor arbitrage Number of years Base scenario – Most probable operating cost inflation and currency appreciation XX XX XX Pessimistic scenario – higher operating cost inflation and currency appreciation XX XX XX Locations | Regional developments ITO SERVICES Optimistic scenario – Lower operating cost inflation and currency appreciation XX XX XX  Region Asia Key developments  Source/destination countries U.S.-XXXX U.S.-XXXX U.S.-XXXX China – – XXXX – XXXX – XXXX India – – XXXX – XXXX – XXXX Thailand – – XXXX – XXXX Estonia – – XXXX Hungary – – XXXX Poland – – XXXX – XXXX  BPO SERVICES Base scenario – Most probable operating cost inflation and currency appreciation XX XX XX Pessimistic scenario – higher operating cost inflation and currency appreciation XX XX XX Optimistic scenario – Lower operating cost inflation and currency appreciation XX XX XX  Eastern Europe  Source/destination countries U.S.-XXXX U.S.-XXXX U.S.-XXXX  Locations | Regional developments Region Asia Key developments  Locations | Focus geography Annual change in real estate rentals (grade A) Percentage -X% City 1   Sri Lanka – – XXXX – XXXX India – – XXXX – XXXX Egypt – – XXXX – XXXX – XXXX – XXXX -X% XXXX XXXX  City 2   Africa  City 3 X% XXXX XXXX City 4 X%   XXXX XXXX City 5 X%   XXXX XXXX XXXX XXXX -X% City 6  City 7 X%  Includes a deep-dive on emerging locations covering costs, inflation, currency trends, etc. Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 15 Section III – Service provider developments | Overview Profiles developments across 20 leading service providers, highlighting key implications for sourcing managers Service provider developments analysis | Transaction activity Transaction announcements activity in QX Year Y and trend over QX-1 Year Y Increased from last quarter Similar to last quarter Decreased from last quarter Service provider developments analysis | M&A and alliances M&A by service provider category Number of acquisitions XX Alliances by service provider category Number of alliances XX Service provider High activity Service provider 1 Service provider 2 Service provider 3 Service provider 4 Service provider 5 Service provider 6 Service provider 7 Moderate activity Service provider 8 Service provider 9 Service provider 10 Service provider 11 Service provider 12 Service provider 13 Service provider 14 Service provider 15 Service provider 16 Service provider 17 Low activity Service provider 18 Service provider 19 Service provider 20 ITO deals Number Trend XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX BPO deals Number Trend XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX Both ITO & BPO Number Trend XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX XX     XXXX XXXX XXXX XXXX XX Offshore-centric service providers XX Offshore-centric service providers XX XX XX XX XX Traditional global service providers XX Traditional global service providers XX XX QX-1 Year Y   QX Year Y QX-1 Year Y QX Year Y XXXX XXXX Service provider developments | Market Vista Index of service providers Traditional global service providers Offshore-centric service providers Key market developments Recent transaction activity Buyer name Buyer 1 Buyer 2 Buyer 3 Buyer 4 Buyer 5 Buyer 6 Buyer 7 Buyer 8 Buyer 9 Buyer 10 Buyer 11 Location footprint Location XXXX Status New center (Planned) New center (Planned) Employees XXXX XXXX Description     Announcement date XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX TCV estimate (US$ million) XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX Duration (years) XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX This section focuses on the key developments of the above service providers across financial performance, recent transactions, major developments in location footprint, mergers, acquisitions, and alliance activity XXXX XXXX XXXX XXXX XXXX Includes over 40 pages of data tables on M&A, new delivery centers, management changes, etc. 16 Services AO, FAO, and HRO AO AO AO AO AO AO and FAO IO AO CC and industryspecific BPO AO Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Service provider developments analysis | Ratings summary Limited activity Moderate activity High activity Service Location provider New deals changes Traditional global service providers Service provider 1 Service provider 2 Service provider 3 Service provider 4 Service provider 5 Service provider 6 Service provider 7 Service provider 8 Service provider 9 Service provider 10 Service provider 11 Source: Everest Group (2011) M&A and alliance activity Overall rating Service Location provider New deals changes Offshore-centric service providers Service provider 12 Service provider 13 Service provider 14 Service provider 15 Service provider 16 Service provider 17 Service provider 18 Service provider 19 Service provider 20 M&A and alliance activity Overall rating Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 17 Market Vista encompasses a suite of offerings Multiple delivery formats allow Global Sourcing Managers to access information in a way that supports the decision-making process Market Vista offering Description Quarterly report with in-depth coverage of transaction, location, and service provider trends Standard subscription access (annual) Premium subscription access (annual) Quarterly Report             18 Primer Quarterly brief of expert perspectives on emerging market trends (e.g., new pricing models) Location database Annually updated database of location stats (e.g., cost, attrition, inflation rates) for 23 major cities Breaking viewpoint Flash reports highlighting breaking industry news and expert perspectives on key implications Locations insights e-newsletter Bi-monthly Global Location Insights e-newsletter containing detailed country and region info Exclusive webinars Exclusive quarterly webinars with stakeholders in the subscriber organization on key market trends and developments highlighted in Market Vista research 10 hours of analyst access per year for personalized insights and additional perspectives Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Analyst consultation Trends reports complement Market Vista quarterly reports by providing in-depth coverage of global sourcing across industry verticals and regions Market Vista Buyer Geography Trends reports Regions tracked  United States and Canada  Europe  Rest of the World (RoW), including Asia Pacific (APAC), Latin America (LATAM), and Middle East & Africa (MEA) Market Vista Industry Trends reports Industries tracked  Banking, Financial Services, & Insurance (BFSI)  Manufacturing, Distribution, and Retail (MDR)  Energy & Utilities (E&U)      Healthcare Technology Telecom Public Sector Travel & Hospitality 30+ pages of analysis on each industry vertical/region every quarter Outsourcing transaction activity GIC set-up and expansion activity Service provider trends and developments Processes and models Decreased from last quarter Similar to last quarter Increased from last quarter Current quarter ITO by process1 Q2 2011; Frequency of occurrence Total = 354 Previous year ITO by process1 2010; Frequency of occurrence Total = 1,381 Change in number of ITO transactions, by process1 Q2 10 to Q2 11 Q1 11 to Q2 11 Application development Application maintenance Systems integration Datacenter 60 81 34 27 90 87 111 348 307 263 339 139 138 472 Network Desktop Helpdesk    Transaction activity was higher among IT ADM processes than IT infrastructure Adoption of ITO processes in Q2 2011 was similar to that in 2010 (yearly average) Adoption of Desktop process declined compared to the previous quarter   Trends in transaction volumes, contract values, and momentum Events with industry impact   GIC set-ups, expansions, and divestures Analysis of buyers, locations, and scope of work offshored   Process-level and subprocesslevel transaction trends Emerging opportunity areas   Service provider performance (transactions, market shares) Significant deals signed by leading enterprises 19 Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Appendix: Additional research recommendations The following documents are recommended for additional insight into the topic covered in this report. The recommended documents either provide additional details on the topic or complementary content that may be of interest: 1. Market Vista: Q3 2012 (EGR-2012-8-R-0776); 2012. This report summarizes the key trends and developments for Q3 2012 in the global offshoring and outsourcing market 2. Industry Trends reports: Trends for Q3 2012. These reports provide industry-specific data, developments, and insights that enable global sourcing managers to navigate through the complexity, and make clear, effective decisions, contextualized and suited to their specific industry. These reports provides a deep-dive into the transaction activity, GIC developments, service provider market share, and key outsourcing transactions specific to the industry. Industries covered include: Banking, Financial Services, and Insurance (BFSI); Manufacturing, Distribution, and Retail (MDR); Energy and Utilities (E&U); Healthcare; Technology; Telecom; Public Sector; and Travel and Hospitality 3. Buyer Geography Trends reports: Trends for Q3 2012. These reports provide data, developments, and insights on outsourcing and offshoring trends for a particular buyer geography/region. These reports provide the research and analysis that enable users to navigate through complexity and make clear, effective decisions suited to their focus region. These reports provide detailed information on transaction activities, Global In-house Center (GIC) developments, service providers’ market shares, and key outsourcing transactions specific to particular regions. Regions covered include: U.S. and Canada; Europe; and Rest of the World For more information on this and other research published by Everest Group, please contact us: H Karthik, Vice President – Global Sourcing: Salil Dani, Practice Director: Anurag Srivastava, Practice Director: Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240 Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 [email protected] [email protected] [email protected] Phone: E-mail: +1-214-451-3110 [email protected] 20 Everest Group Leading clients from insight to action Everest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations, and private equity firms in six continents across all industry categories. For more information, please visit www.everestgrp.com and research.everestgrp.com. Dallas (Corporate Headquarters) [email protected] +1-214-451-3000 Toronto [email protected] +1-416-865-2033 India / Middle East [email protected] +91-124-496-1000 New York [email protected] +1-646-805-4000 London [email protected] +44-207-129-1318 Stay connected Websites www.everestgrp.com research.everestgrp.com Twitter @EverestGroup @Everest_Cloud Copyright © 2013, Everest Global, Inc. EGR-2013-8-PD-0824 Blogs www.sherpasinblueshirts.com www.gainingaltitudeinthecloud.com 21