In 2016 North America Led Setups of Digital Services Centers for Cloud, Automation and Analytics Services—Everest Group
Dallas, TX (PRWEB) May 04, 2017 -- Of 76 global services centers established by service providers in 2016, North America led the way with 29 setups. In its recently published “Market Vista™: Global Services 2016 Year in Review” report, Everest Group explains that the increasing need for client proximity and use of automation is making North America an attractive location for service delivery, with the San Francisco, Seattle and Toronto areas standing out as hotbeds for cloud, analytics and automation services.
Among the service providers tracked in Everest Group’s Market Vista index, 63 percent of service provider setups in 2016 were focused on digital services, rather than traditional IT and business process services. With margins in decline and few service providers experiencing growth, the expansion of digital capabilities through organic and inorganic means is paramount to service provider viability.
“Over the past few years, the service providers we track in our Market Vista index have been more inclined toward opening innovative centers and labs that offer digital services rather than establishing delivery centers that offer traditional IT and business process services,” said Salil Dani, vice president in the Global Sourcing team at Everest Group. “North America and Asia Pacific are the two leading locations for supporting digital services, and North America took the lead in 2016 as service providers sought to leverage multiple Tier-2 onshore locations to increase speed-to-market and drive innovation.”
Another notable growth trend in 2016 involved investments by enterprises in Global In-house Centers (GICs), often called Shared Services or Captives. GIC investment in 2016 was at an all-time high with 29 percent year-on-year increase in new setups.
Both existing firms and new adopters contributed to the GIC activity in 2016, and large buyers (revenue exceeding US$10 billion) drove the growth, representing 52 percent of the new GIC setups. Enterprises based in North America and Rest of Europe (i.e., European countries other than the UK) are the strongest adopters of the GIC model. These trends are expected to continue in 2017.
Conversely, the global outsourcing market growth rate declined in each successive quarter of 2016, and Everest Group expects the growth rate will continue to decline to as low as 1.9 percent through 2019.
In terms of locations, the Top 10 locations for new center setups (i.e., India, Poland, Philippines, Ireland, Costa Rica, Singapore, Romania, Malaysia, Mexico and China) each experienced an increase in setups in 2016. While the list of Top 10 countries has remained fairly consistent over the past few years, players are increasingly seeking options outside APAC as evident by the growing share of Nearshore Europe.
Looking ahead to 2017, Everest Group predicts the following for the global services market:
- Big disruption: Technology-led disruption will impact service delivery models to meet new value expectations.
- Market slowdown: The outsourcing growth rate with continue to decline over the next 12-24 months.
- Do It Yourself: Enterprises will demonstrate an increasing preference for in-house delivery.
- Location portfolio realignment: Enterprises will have to revamp their location portfolio, given the changing nature of workforce skills and service delivery models.
- ‘Go digital’: GICs will increasingly act as catalysts for the digital agenda.
These findings and predictions are explored in “http://www..everestgrp.com/reportaction/EGR-2017-8-R-2138/Marketing [Market Vista™: Global Services 2016 Year in Review: Global Services Industry facing 'Winds of Change __title__ ].'" This report gives an overview of the developments that took place in the global services industry in 2016. Highlights include key trends and drivers pertaining to GICs, offshore/nearshore locations, service providers, and outsourcing transactions. Besides providing an outlook for 2017, the report highlights implications for market participants as well.
*** Download Complimentary, Publication-Quality Graphics Here ***
High-resolution graphics illustrating key takeaways from this research can be included in news coverage, with attribution to Everest Group. Graphics include:
• Global In-house Center (GIC) activity 2016
• Is your location portfolio changing with the times?
• Off- and nearshore delivery continues to entice
• Top 10 global services delivery locations activity
• Top service providers beware!
• Outsourcing transactions: traditional vs. digital
• 2016 Global services market activity heatmap
About Market Vista™
Market Vista—a subscription-based service of Everest Group—provides the research, analysis and insights that enable Global Sourcing professionals to navigate the complexity of today’s sourcing market and make informed and impactful decisions. Market Vista research includes developments related to service providers, locations, processes and sourcing models, as well as a comprehensive outlook of the fast-evolving global offshoring and outsourcing market.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.
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Contact:
Andrea M. Riffle, Everest Group
andrea.riffle(at)everestgrp.com
Jennifer Fowler, Cathey Communications for Everest Group
+1-865-386-6118
Jennifer(at)cathey.co
Andrea M. Riffle, Everest Group, http://www.everestgrp.com, +1 954-801-8474, [email protected]
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